The Archive

IN THIS EDITION

The nightmare before Christmas

When trade enters the chat

A fleeting moment for the PBM overhaul

From compromise to ‘hell no’ to passage

French Hill and 45 years of fintech

THE TOP

The nightmare before Christmas

Welcome to The Readback, our weekend digest featuring the best of Punchbowl News this week – a quick roundup of all our scoops, analysis and Capitol Hill insight you won’t find anywhere else. We’ve also included a few of our favorite outside reads from the week.

It’s our last edition of the year so it seems fitting to bring you something a little different.

A Christmas poem. ‘Twas the week before Christmas, and all through the House, a shutdown storm was brewing, with President-elect Donald Trump and Elon Musk ready to pounce.

A CR had been negotiated between Speaker Mike Johnson and Democrats with care, in the hopes they could fund the government and quickly get out of there.

The lawmakers were nestled in their offices pouring through text, when Musk suddenly began trashing the bill on X.

Trump got in on the action, adding a new demand: “The debt ceiling must be included, or I’ll get Big Mad.”

Yet some Republicans were unwilling to be tamed. So Trump called them out by name. “Now, Rep. Chip Roy! Now, Rep. Bob Good! On Johnson — he’ll keep his speakership if he does what he should!”

To the House floor they went, with the new CR plan of which Trump spoke. But that also quickly went up in smoke.

Leadership scrambled to come up with a plan C, as the shutdown clock ticked down rapidly.

A new idea emerged — to split up their package into three. Johnson was eager to avoid the optics of another so-called Christmas tree.

But then Republicans huddled in the Capitol basement to get on the same page. They decided to pursue a CR without the debt limit and hoped Trump wouldn’t rage.

The smell of jet fumes quickly began to spread, as visions of vacation danced through members’ heads.

Finally! The House was able to pass a bill with the help of Democrats. Then it was off to the Senate, where it also passed.

As Johnson left the building, he made a reference to his plight: “Merry Christmas to all! And to all, please no more fights.”

What I’m listening to: Sabrina Carpenter’s new Christmas special on Netflix.

– Melanie Zanona

Listen to The Readback Podcast! Enjoying a behind the scenes look at how the biggest stories of the week came to be? Punchbowl News’ Max Cohen takes you even further behind the scenes in our newest podcast: The Readback. Listen now!

When trade enters the chat

When CR talks are running into the weekend and demands are flying, it’s always a little risky to think you’ll have a calm weekend as a policy reporter.

So, I was mentally prepared when I got a text last Saturday afternoon with a tip that something was going down on trade policy.

I texted and called a bunch of sources trying to pin down what was in the mix. I was able to get a sense of the talks – extensions for the African Growth and Opportunity Act and a Haiti trade program for apparel exports that both expire in 2025. And I still made it over to a friend’s family Christmas party by Saturday night.

But by Sunday morning, things had shifted again, as they often do in these fast-moving bargaining situations. So I was back to sending texts and making calls pretty quickly. We broke the news that Democrats were making a long list of demands that included AGOA and the Haiti program in exchange for economic aid for farmers that the GOP wanted badly.

But it wasn’t over just yet. If you talk to anyone who’s worked on trade policy, they’ll tell you all about how difficult it is to land a trade deal. There’s been rising protectionism in both parties. Labor unions, a critical ally for Democrats, have strong opinions in this arena. Those are just a couple of the dynamics.

I started covering trade this year after writing about taxes for a while. Tax policy is another notoriously difficult area to find any agreement. Still, some people emphasized to me at the time that I’d found an even harder area to cover. Fun!

What I learned amid the CR haggling was that lawmakers had actually closed in on a trade deal for five-year extensions of both AGOA and the program allowing duty-free access to the U.S. market for Haitian apparel exports. Then Speaker Mike Johnson did a 180 and killed the deal, specifically pulling out AGOA and letting the Haiti program go forward. Republicans had been insisting on both.

Cue the drama.

Ways and Means Committee Chair Jason Smith (R-Mo.) was angry. Johnson encouraged his talks and then sunk his deal. We broke the news that Smith spoke up in a House GOP Conference meeting about this – clashing with the speaker – and then the backstory of why.

Then… you know the rest. President-elect Donald Trump blew up the CR anyway and a much bigger mess unfolded. No trade programs are going anywhere now. Back to square zero.

But along with the policy implications, following the trade talks told an important story about what Johnson says and does as speaker. He’s walking a tightrope right now in a volatile House GOP Conference and tiny margins. It’s not only Republican hardliners that Johnson frustrated this week.

What I’m watching: I’ve been catching up on the latest season of Survivor. Not quite at the finale yet but excited to see how it all ends! Solid season so far.

– Laura Weiss

A fleeting moment for the PBM overhaul

It was almost a big day for health care policy.

Rumors had been swirling in the health world for the past few weeks, bobbling between whether lawmakers would do a simple extension of must-do health items or a package of sweeping bipartisan reforms.

For a second, it looked like the latter. Democrats and Republicans were taking victory laps over the first version of the continuing resolution, which included an overhaul of pharmacy benefit managers that was years in the making.

Our first clue that this wasn’t going to happen should’ve been the fact that lawmakers like Frank Pallone (D-N.J.) and Bernie Sanders (I-Vt.) were highlighting their wins in the agreement.

The biggest parts of the health deal were the several measures related to PBMs. They were popular bipartisan provisions that would have increased transparency in pricing and provided billions of dollars of offsets for the larger bill.

This was a miracle, according to several lobbyists who I texted with when the first CR text dropped. For weeks, health negotiations were on a “will they or won’t they” rollercoaster. Cautious lobbyists had warned that nothing was set until the bill was signed into law, which ended up being quite forewarning.

We chronicled those ups and downs in The Portal, Punchbowl News’ policy-focused newsletter that’s delivered to inboxes on Mondays and Thursdays. (Here’s a shameless plug to sign up for that newsletter and our new legislative intelligence platform.)

After that CR deal imploded, we heard that PBMs were out, and the larger health package was doomed. That also meant that several other bills fell out of the agreement, including money to accelerate research for children’s cancer treatments (which passed the Senate as a standalone bill Friday night), a five-year authorization for mental health and substance abuse programs and a major funding boost for community health centers.

For PBMs, avoiding these new rules is a huge win. But it won’t last long. President-elect Donald Trump has said he wants to go after PBMs, calling them “the middlemen.”

Republicans through Thursday night were promising to still go after PBMs. Rep. Rich McCormick (R-Ga.), who voted against Speaker Mike Johnson’s Plan B, didn’t like that the PBM provision was taken out in the first place.

Rep. Derrick Van Orden (R-Wis.), for what it’s worth, promised that PBM changes will come back but in January, not in this CR.

“We just need some breathing room,” Van Orden told reporters Thursday night. “I have the utmost confidence those are going to come back in. That is the way that we’re going to save billions of dollars.”

We’ll see about that. Regardless, lawmakers plan to address some health care issues in the reconciliation process next year, so there will be plenty of chances.

What I’m listening to: “Merry Christmas, Please Don’t Call” by The Bleachers. It’s the best new Christmas song I’ve heard in a while, and the perfect melancholy tone to accompany this week’s vibes at the Capitol.

– Samantha Handler

From compromise to ‘hell no’ to passage

As someone who has covered House Democrats closely over the past couple of years, I’ve learned to read House Minority Leader Hakeem Jeffries well. The top House Democrat likes to lead off almost every press conference with an appeal to find common ground with Republicans wherever possible.

But this week, we saw a different side of Jeffries as we hurtled toward the prospect of a government shutdown.

Things seemed to be going well on Tuesday evening when Hill leaders released a continuing resolution that resulted from bipartisan negotiations. Democrats had secured some major wins in exchange for letting Republicans add more aid for farmers.

But when billionaire Elon Musk and President-elect Donald Trump blew up the deal a day later, Democrats were apoplectic. Any funding deal needs Democratic votes thanks to the Democratic-controlled Senate and President Joe Biden. So the desire to go with an only-Republican route infuriated Democrats.

A key moment in the week came on Thursday afternoon when House Democrats gathered to discuss a new GOP proposal. The bill, which received Trump’s stamp of approval, would fund the government until mid-March, provide disaster aid, extend the farm bill and extend the debt limit for two years.

This didn’t go down well with Democrats, who’d be giving up a major point of leverage if they agreed to extend the debt limit with little in return.

As Jeffries was making his way into the closed-door meeting with his caucus, I asked him what he made of the new proposal. The New York Democrat usually is tight-lipped with his public statements and is relentlessly on message. So I wasn’t holding my breath for anything notable.

But Jeffries paused, made eye contact and waited until he was in front of a crowd of TV cameras before eviscerating the “Musk-Johnson deal” as “laughable.”

Minutes later, as reporters waited in the hallway outside the meeting room, we heard a loud chant of “hell no!” from the House Democrats. Jeffries had rallied his troops to oppose the new plan, which only gained two Democratic votes on the floor later Thursday night.

House Democrats had bailed out Republicans frequently on must-pass votes during the 118th Congress. But not that time.

Fast forward to Friday evening, and not a single Democrat voted against the new plan (which funded the government until March, extended the farm bill and provided disaster relief). It was yet another sign of how united Jeffries kept his caucus. Speaker Mike Johnson can only imagine that level of togetherness.

What I’m reading: This deeply reported Wall Street Journal article on how President Joe Biden operates.

– Max Cohen

French Hill and 45 years of fintech

Forget about crypto for a second. The next chair of the House Financial Services Committee has been pushing for innovation in the banking sector for nearly half a century.

I knew Rep. French Hill (R-Ark.) was not a new supporter of financial technology, or fintech. But I didn’t realize until this month just how long the former banker has pushed for meaningful changes to financial regulation for the sake of new technologies.

In my sitdown interview with Hill for last week’s edition of the Sunday Vault, I asked what actually sold him on crypto. I only had room to include part of his answer in that newsletter. The fuller answer is worth unpacking.

Branch-less banking: When Hill was working for a large Texas bank somewhere around 1979, the state was a “unit banking” state. That means banks weren’t allowed to open branches. Their headquarters were the whole thing.

“Illinois, Colorado and Texas were unit banking states. So, no branches. Literally zero,” Hill said.

That state restriction was tied to an early 20th-century banking panic that predated the Great Depression by nearly 30 years. It wasn’t lifted by the Texas State Legislature until the 1990s.

However, in the late ‘70s, the inability to open branches limited where and how banks could gather deposits. That kept the Texas banking sector from growing too fast, but it also forced banks to concentrate their business in limited geographic areas.

“This was making the system more risky,” Hill said. Sure enough, that concentration became a problem by the 1980s when hundreds of Texas banks failed.

In Hill’s retelling of the years leading up to that, he recalled joining a group of bank officials who successfully advocated for changes to the law to make it a bit easier for banks to expand their offices.

Somewhere between 1979 and 1980, Hill said, “We went to Austin, and we got a law change that said that if a facility was connected to a bank by pneumatic tube or other electronic device, within 5,500 feet or something like that – it wasn’t a branch.”

If you squint, you can see a proto-argument for the theoretical promise of crypto – decentralize your operations a bit, and things get a bit less risky. That wasn’t enough to stave off the Texas crisis, of course, which had much to do with the state’s heavy investment in the oil and gas sector as a global energy crisis roiled the United States.

“All those banks failed because they had no diversified deposits,” Hill said.

But it’s a good reminder of a fundamental belief Hill is bringing into the 119th Congress as lawmakers weigh significant changes to the financial system for the sake of crypto: integrating innovations into the legal framework of finance can make it safer.

We’ll see if Hill is right. Plenty of lawmakers, particularly veteran Democrats, take the opposite view after seeing how subprime mortgage lending and other “innovations” made the 2008-2009 financial crisis dramatically more severe.

What I’m watching: I am really, really enjoying “The Later Daters” on Netflix, a documentary-style show that follows the dating lives of 50-plus-year-olds. The cast is great, and there’s something very satisfying about watching folks with a lot of life under their belts navigate the dating scene. The good dates are heartwarming! The bad dates are memorable!

– Brendan Pedersen